Strategic Sourcing: Dr. Kunal Ghosh
Strategic Sourcing: Dr. Kunal Ghosh
Substitution available
• Monopolistic market
• Large entry barriers
• Many competitors
• Commodity products
• Market leaders
• Specific know-how
• Large supply
• Many suppliers with dependent position
• Suggested action:
• Reduce number of suppliers
Kralijic’s purchasing product portfolio
• Technology leaders
• Few, if any, alternative suppliers
• Strategic products;
• Strategic products;
• Leverage products:
• Leverage products:
• Leverage products:
• Bottleneck products:
• Bottleneck products:
• Normal products:
• Normal products:
• Balanced Relationship:
• Partnership:
• Partnership:
• Partnership:
• Partnership:
• An essential aspect of this strategy is the thorough selection
process of the supplier.
• Early in the development, the market is scanned for the ‘best-
in-class’ suppliers.
• These suppliers are screened on their references, financial
stability, production capacities, the quality of their logistics &
their quality systems &
• of course their R&D and engineering capabilities.
Basic Supplier Strategies
• Competitive bidding:
• Competitive bidding:
• Competitive bidding:
• Competitive bidding:
• Systems contracting:
• Buyers will have to work out simple but efficient ordering and
administrative routines with the suppliers in the form of
systems contracts.
Basic Supplier Strategies
• Systems contracting:
• A few aspects relevant to the policy for these products are
• standardizing the product assortment,
• reducing the number of suppliers,
• pursuing systems contracts for groups of MRO items
• (i.e., office supplies, technical maintenance products, catering,
etc.), working with electronic catalogues and ordering through
Internet.
MRP Concepts
• The order release date (ORD) ensures that the components and
sub-assemblies are available on time to meet the requirement
of assemblies as per MPS.
• MRP time buckets are usually 1 week, but if lead times can be
reduced & material flow situation is improved, even daily time
buckets can be used.
MRP Concepts
• We need
• The choice of factor “K” in the formula for determining the safety
stock is correlated with desired service level, and
• We need to find the best vendor and engage them early in the
design process.
Strategies for Lean Materials Management